HOME AFFAIRS DEPARTMENT
2006 QUARTERLY FINANCIAL REPORT – PERIOD TO 31 DECEMBER 2006
Exempt Clause: Report N/A, Appendices 3.2 (a) (xiv)
1. Introduction
The purpose of this report is to:-
· provide the Minister and Assistant Minister with an overview of the Home Affairs Department’s financial position as at the 31 December 2006;
· satisfy the requirements of Financial Direction 6.5 – Ministerial Financial Reporting, which details the minimum level of financial information to be provided to Ministers at least quarterly, with the necessary report being available no later than six weeks after the quarter end.
Paragraph 5.2 of Financial Direction 6.5 states that:-
‘Ministers are ultimately accountable for the funds allocated to them and it is important that they receive regular and accurate financial information. The accounting officer will be responsible for ensuring that funds are spent in accordance with the purposes for which the expenditure was approved.’
2. Analysis
The Committee’s 2006 financial position is summarised in the attached appendices:-
· revenue expenditure/income overview for the Department (Appendix 1);
· revenue expenditure/income summary for each individual area/service (Appendices 2–9);
· overtime summary (Appendix 10);
· summary of capital projects (Appendix 11).
3. Financial Highlights
3.1 Appendix 1 is a summary of the Department’s revenue expenditure and income compared to the budget.
The Department’s net revenue budget for 2006 was £39.36 million and the Department has been able to operate within budget in 2006, and has an unspent balance of £178,778 at the end of the year which it hopes to carry forward to 2007. The carry forward request is included in the report to the Minister – Annual Financial Report and Accounts 2006.
The actual unspent balance at the end of 2006 compares to a projected underspend of £196,529 at the end of September 2006.
These amounts exclude the Safety Grants Fund which Is a ring fenced amount of £273,365 carried forward from 2005 and which will be transferred to the Transport and Technical Services Department in 2007.
3.2 The 2006 revenue budget includes a carry forward balance from 2005 of £797,152. This consists of a negative 2005 year end outturn of £82,848 within HM Prison and £30,000 which is an element of funds allocated from the Drug Trafficking Confiscation Fund for the Building a Safer Society Strategy. In addition, the Department was allocated, from other former Committees carry forward balances, a sum of £300,000 towards the Defence Contribution and £550,000 for HM Prison.
The total staff budget of £32.48 million, which is equivalent to 80% of the net budget (Appendix 1) was underspent at the end of 2006 due to the non recruitment of staff pending confirmation of future year’s budgets and the delay in the implementation of post-custodial supervision legislation.
3.3 Home Affairs Executive (Appendix 2)
The service area includes a budget of £200,000 for the Criminal Injuries Compensation Scheme (CICS), in respect of which expenditure in 2005 amounted to £230,000 and almost £440,000 in 2006. In order to provide a level of control over expenditure, the Chairman of the Scheme has been informed that all awards made in excess of the £200,000 budget will require the authorisation of the Chief Officer - Home Affairs, prior to payment. A meeting has been held with the Chairman who, despite being made aware of the budgetary constraints facing the Department, has indicated that in accordance with the Law governing the CICS, the granting of compensation cannot be restrained by the budget available. The Chairman wrote to the Treasury and Resources Minister requesting that the Treasury should make funds available, but was advised that the Department should consider ways in which any future potential overspend can be met internally.
A request was previously made to the Treasurer of the States for any overspend against the budget to be reimbursed from Court and Case Costs but he is of the view that this is not an appropriate call on the Court and Case Costs budget.
The funds allocated to the Department for the implementation of Post-Custodial Supervision have been retained within the Executive budget until the relevant legislation has been introduced. Recruitment at the Prison to meet the responsibilities of Supervision is likely to take place in 2007. These funds have been required to meet the additional costs of CICS compensation in 2006 and this will make it difficult to co-ordinate the operation of Post-Custodial Supervision with the Probation Department who has already recruited in order to commence their Through-Case Policy.
Responsibility for the ongoing administration of the Safety Grants Fund now rests with the Transport and Technical Services Department following the transfer of Driver and Vehicle Standards at the commencement of 2006. The balance of the Fund at the end of 2005, apart from a number of small grant payments approved in 2006, has been transferred to that Department following the agreement of the Minister.
3.4 States of Jersey Police (Appendix 3)
Expenditure on supplies and services was overspent by £362,000 and it is intended that in 2007 a review of budgets will be carried out. In 2006 this overspend has been offset by staff vacancies and administration savings.
The States of Jersey Police is required to accommodate the strict requirements of the Regulation of Investigatory Powers (Jersey) Law (RIPL) in order to comply with its obligations under the Human Rights Law in respect of alleged offences. An additional 5.5 posts will be required upon the introduction of RIPL and full additional funding will not be made available until 2008. However, a sum of £145,000 has been made available from the Criminal Offences Confiscation Fund in 2006, being part year funding required for the posts.
Although ultimate responsibility for the Emergency Planning function rests with the Chief Minister’s Department, operational responsibility has been transferred to the Chief of Police. It had been agreed that the ‘normal’ costs of the function, based on previous years expenditure, will be incurred by the Police and recharged to the Chief Ministers Department. However, due to 2006 being a year of transition for the function, there are additional costs estimated, for the recruitment of a new Emergency Planning Officer, an independent radiation report and the cost of the 10 year lease of a bunker paid in arrears, all of which are likely to be one-off. The Chief Ministers Department has been informed of the extra costs and an agreement reached that the Police will be reimbursed in full. The function continues to be reviewed to identify potential savings, although these are unlikely to materialise until at least 2007.
Charges for services provided by the Criminal Justice Unit, which had not been reviewed since 1998, have been increased by 2.5% per annum. Although the additional income is minimal this will help offset the costs of the Unit. The approval of the Treasurer has been requested for the introduction of a charge for Visitor Firearms Permits to comply with Financial Direction No. 4.1 – Increase in States Fees and Charges, and consultation has taken place with the Comité des Connétables in accordance with the Firearms (Jersey) Law 2000. Additional income will amount to approximately £2,000 per annum which will be used to offset the costs of administration.
The overspend of £367,414 within Court and Case costs has, as in previous years, been reimbursed from central funds under the administration of the Treasury and Resources Department.
3.5 H M Prison (Appendix 4)
A thorough review of the HM Prison budget has been completed and as forecast, given the allocation of funds carried forward from 2005, it was adequate to meet operational requirements in 2006. The budget does not however include any allowance for the implications of the recent HMI Inspection, and the Prison will therefore continue to operate below minimum acceptable standards unless additional funds can be provided. Budgetary responsibility has been devolved to senior managers within the Prison and monthly scheduled meetings allow the budget to be monitored on an ongoing formal basis.
Although a budget has been established from carry forward funds for the recruitment of Operational Support Grade (OSG) staff in 2006, the Prison was unable to recruit to all of the posts until an ongoing budget had been identified. A total of twelve OSG’s were recruited in May and these will have a significant impact on the security of the facility. The recruitment of the additional OSGs has been put on hold which led to short term savings in 2006. The Prison will commence recruitment to its full complement of staff in early 2007.
The savings in manpower costs in 2006 were in part used to supplement the non-staff budget until savings can be realised particularly in the number of prisoners sent to prisons in England and Wales and were used to cover additional expenditure incurred on the Prison Improvement Plan (PIP).
The shortfall in the budget for 2007 and thereafter is currently estimated to be £350,000.
3.6 Fire & Rescue Service (Appendix 5)
The Service had an underspend in 2006 mainly due to the late delivery of specialist protective clothing.
Following a recent review of Fire Service premises, it is apparent that an extensive amount of maintenance will be required to bring the Station up to standard and to meet health and safety requirements. It is likely that there will be additional cost due to the fact that the Station is listed as a building of local interest. The work will exceed the budget set aside for property maintenance and a meeting has been held with representatives of Property Holdings to determine a way forward. The work may need to be scheduled over a number of years although during this time the building is likely to fall into a further state of disrepair.
3.7 Customs and Immigration (Appendix 6)
The Department operated within budget in 2006 although recruitment to full capacity has had to be frozen as there is an insufficient ongoing budget to facilitate full recruitment. Additional surplus income has been received from the sale of Passports and Legalisation of Documents.
A projected future £60,000 shortfall in the budget required to meet the costs of a full complement of staff was increased to approximately £130,000 due to recent pay upgrades to Customs/Immigration Officers. Part of this shortfall has been met by an increase in the budget for income from passports, to reflect the increase in fee on the 1 December 2005. The Head of Service continues to review options to meet the balance of the shortfall and intends to control manpower costs to ensure that the budget is not exceeded.
The Head of Service has prepared a paper on the continuous under funding of the Department’s staff budget which has been exacerbated by the regradings referred to above. By 2008 when the Officers will be at the top of their grades, it is likely that the shortfall will amount to approximately £250,000. Significant operational changes will need to be made for the Department to continue to remain in budget, and these will impact on the effectiveness of the Service and its ability to achieve objectives.
A sum of £60,000 has been spent from the Department’s revenue budget on the Biometric Passport System and a sum of £200,000 from minor capital, which was introduced from October 2006. The Council of Ministers has recommended that the increased cost of the Biometric Passport System should be met from the application of the ‘User Pays’ principle. The UK Home Office had previously indicated that the amount of the increase would be sufficient to meet additional costs, however the increase finally applied, although being sufficient to cover revenue costs will not be adequate to make capital repayments.
The overspend of £101,980 within Court and Case costs has, as in previous years, been reimbursed from central funds under the administration of the Treasury and Resources Department.
3.8 Building a Safer Society (Appendix 7)
An underspend of £46,000 was achieved in 2006.
3. 9 Jersey Field Squadron (Appendix 8)
A sum of £300,000 from 2005 carry forwards was added to the budget for 2006, which now equates to the budget estimate supplied by the Jersey Field Squadron. This is only a one year addition to the budget and although the Department has been allocated an additional £250,000 in 2007 as part of the 2006 – 2008 Resource Allocation Process there will be an estimated £65,000 ongoing shortfall. The Minister will be aware that this element of the budget is outside of the control of the Department and demand may increase if the Squadron recruits up to its full complement of staff.
The Council of Ministers is already aware that the contribution which the Island makes to the defence of the United Kingdom has been referred to the Department for Constitutional Affairs.
3.10 Superintendent Registrar (Appendix 9).
A small underspend was achieved in 2006, despite the predicted shortfall in income.
The Superintendent Registrar has carried out a review of staff responsibilities to provide more flexible working arrangements, but was unable to complete the process as this would cause the function to be overspent at the year end, due to a predicted shortfall in income. All charges are in the process of being reviewed to determine whether there is potential to meet income targets.
4. Other
4.1 Overtime expenditure was £1.78 million during the year, equivalent to 5.7% of total staff costs (Appendix 10). This compares to £1.74 million for 2005, 5.3% of total staff costs.
4.2 A review of Court and Case costs was carried out by the UK National Audit Office in 2005 and one of its recommendations was that certain items of expenditure, notably towing and doctor’s fees incurred by Police, should be excluded from such costs. It was been agreed in principle that towing fees should be excluded although doctor’s fees are considered to be a legitimate element of Court and Case costs, in accordance with a definition supplied to the Treasury in 2005. Officers will work with the Treasury and Resources Department in 2007 to agree what costs should be excluded.
4.3 In order to improve budgetary control, a formal review of actual expenditure against budget has been included on all monthly management team meetings so that potential problems can be highlighted at the earliest opportunity and actions taken to avoid an overspend at the year end. In addition, monthly financial reports are distributed to budget holders by e-mail to ensure that they have the necessary information to monitor and control expenditure. The Department will transfer to the corporate financial reports that have been developed for all States Departments in accordance with the Treasury timetable.
4.4 All Service areas within Home Affairs have completed the process of accurately profiling budgets so that the monthly reports provide an appropriate management tool for monitoring expenditure against budget. The majority of budgets on the financial ledger are currently profiled monthly.
4.5 As part of the ongoing process to ensure adherence to Financial Directions, a review is taking place of Travel Policies across the Department. Ministerial approval will be required at the end of the process in accordance with Financial Direction No. 5.2 – Travel and Accommodation Expenditure.
5. 2007 Budgetary Pressures
A process of prioritisation has been carried out to identify the potential for transferring budgets between the service areas within the remit of the Home Affairs Department to meet the anticipated shortfall in 2007 predicted in the Prison and Defence Contribution. A formal report, which also details the impact on the Services of further cuts in budget, has been sent to the Treasurer of the States and the Chief Executive Officer and a meeting was held with the Chief Officer and Finance Director of Home Affairs to discuss the way forward.
The Council of Ministers discussed a paper prepared by the Treasury and Resources Department on Emerging Financial Pressures at its meetings in October and December 2006, and as a result additional funds of £500,000 have been made available for the Department in 2007.
6. Capital
6.1 A total of £24.8 million has been approved for capital projects and a balance of £9.96 million is available for completion. It is forecast that all projects will be completed within budget (Appendix 11).
6.2 Following agreement with the Council of Ministers, the proposal to bring forward to 2007 capital funding to provide a new 135 cell accommodation block and a recreation/sports facility had been included in the 2007 Business Plan. This adjustment to the Capital Programme has been achieved partly through the use of advance funding for the Police Headquarters. This will not delay the projected start date for this project.
A sum amounting to a maximum of 75% of estimated fees has been ‘drawn down’ from capital funds allocated to the Prison in 2007 to be able to fund detailed design and development costs in accordance with Financial Direction No.5.6 – The Control of Capital Expenditure.
6.3 Following the establishment of the Property Holdings Department the Minister has agreed that the management and budget for property related capital projects should be transferred to that Department with effect from 01 February 2007.
6.4 Minor Capital funds allocated to Home Affairs in 2006 are to be utilised to provide a replacement prisoner telephone system (£80,000) and as a two-thirds contribution to the project to convert an area of the rear of the ambulance station for use as a ‘satellite’ workshop to service primarily ambulances and police vehicles (£80,000).
In addition £100,000 has been allocated from minor capital to Customs and Immigration for Biometric Passports funding.
The balance of the funds (£106,081) has been allocated to the Police as there are significant requests within that area for the use of the funds.
6.5 The Department has been given significant flexibility with its minor capital allocation. Following a review of the Fire Service vehicle replacement programme funds will not be required until 2009 although in that year and in 2011 the Service will require a major portion of the allocation.
7. Efficiency Savings
All Services areas within the remit of the Home Affairs Department continue to review their operations to achieve value for money and release efficiency savings. A number of areas are currently being considered and in some cases progressed:-
· medical provision to members of the Uniformed Services;
· review of all income streams to ensure recovery of cost;
· accommodation of the Police Complaints Authority;
· review of departmental vehicle replacement policies;
· relocation of the Home Affairs Department.
8. Balanced Scorecard
Paragraph 5.14 of Financial Direction 6.5 states that ‘as part of quarterly scorecard reporting to the Corporate Management Board, all departments are required to include the following financial measures:-
• x fte’s of overtime, costing £x;
• £x, x % overspent /underspent against profile;
• £ x, x % overspent/underspent against projected year end position;
• % of Internal Audits assessed at 3 or above; and
• x % capital projects overspent by £x. ‘
These measures are currently reported separately to the Minister but will be included in the Ministerial quarterly financial reports with effect from 2007.
9. Conclusions
9.1 Financial Direction 2.2 – Accounting Officers, stipulates that the accounting officer of each States funded body is personally accountable for the proper financial management of the resources of the Department and for ensuring that the expenditure of the Department does not exceed the amount appropriated to it by a head of expenditure and is used for the purpose for which it was appropriated. All Heads of Service and the Chief Officer, States of Jersey Police will continue to ensure that budgets are adequately controlled to ensure that they are not overspent and to enable compliance with this Financial Direction.
9.2 The Department will continue to review its finances, prioritise its services and pursue efficiency savings, so that it can recommend to the Minister how services can remain within budget in 2007 and thereafter. However, this will involve savings measures which will impact upon operational capability. Subsequent periodic reports and other financial information will be provided in order to assist the Minister in deciding whether to seek additional funding to augment the Home Affairs budget.
9.3 A request was submitted, to the Minister for Treasury and Resources at year end for reimbursement of overspends within Court and Case costs incurred by Police and Customs and Immigration. This was approved and the funds received.
9.4 The Department will request that that the full unspent balance of £178,778 is carried forward to 2007. The allocation of the carry forward balance and the request to the Treasury and Resources Minister is included in the report to the Minister – Annual Financial Report and Accounts 2006.
10. Recommendations
It is recommended that the Minister notes the Home Affairs Department’s financial position as at the 31 December 2006.
Prepared by:
Liz Middleton – Finance Director
Carol Nicholas - Finance Manager
06 February 2007
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